New ASIC standards will make organisations more risk aware

17 October 2019Consultancy.com.au

The new regulatory guidelines put in place by the Australian Securities and Investments Commission (ASIC) are set to drive accountability and corporate governance standards up across Australia. This is according to Deborah Latimer andKaren Den-Toll, partner at Deloitte.

New ASIC standards were laid out by Chairman James Shipton at the Australian Institute of Company Directors. The standards pertain to non-financial risk, which is the umbrella term for organisational risks that stem from conduct, operational, compliance and strategic factors. Analysts view the new standards as a boost to corporate governance in Australia.

Essentially, the burden is now on organisations to answer for the manifestation of such risks, more so than ever before. The new perspective builds on the premise laid by a 2019 report on the Royal Commission into Misconduct in Banking, Superannuation and Financial Services, which deemed every unlawful act as an organisational failure.

Deborah Latimer, a partner at Deloitte Australia specialised in Corporate Governance, has described this new approach as one of ‘why not litigate.’ The increasingly stringent climate is pushing up the demand for risk consultancy services, driving many advisory firms to boost their capabilities in the risk advisory domain, Deloitte included.

The Big Four accounting and advisory firm acquired risk consultancy Converging Data Australia earlier this year. Latimer ascribes significant value to the new paradigm, highlighting that it will drive a more disciplined corporate governance environment in the country.

“ASIC’s work is essentially focused on the overall governance by corporate Australia of conduct risk. It should prompt organisations to consider how their governance structures support good conduct outcomes,” said Latimer.

“While ASIC’s initial focus is on seven organisations from the financial services sector, this will not stop there. As Australia’s corporate regulator, the duties of company directors set out in the Corporations legislation apply broadly. ASX listed entities in every sector should be asking themselves: ‘Would we be ready for an ASIC Taskforce review?” she added.